FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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In 2020, Frost Company, which began operations in 2018, decided to change from LIFO to FIFO because management believed that FIFO better represented the flow of their inventory. Management prepared the following analysis showing the effect of this change:
Ending Inventory
|
LIFO
|
FIFO
|
Cumulative Difference
|
12/31/2018 | $240,500 | $275,300 | $34,800 |
12/31/2019 | 246,400 | 306,200 | 59,800 |
12/31/2020 | 254,400 | 326,200 | 71,800 |
Frost reported net income of $2,584,500, $2,313,500, and $2,033,500 in 2018, 2019, and 2020, respectively. The tax rate is 35%.
Required:
1. | Prepare the |
2. | What amount of net income would Frost report in 2018, 2019, and 2020? |
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